5 things to prepare you for the proposed changes to superannuation announced in the Federal Budget

1. Tighter limits to be placed on contributions into super:

Concessional Contributions: Annual cap to be reduced to $25k (AWOTE-Indexed) from 1 July 2017. Some catch up allowances will be allowed for those with a balance under $500,000.

Non – concessional contributions: To be reduced to a lifetime cap of $500,000 with immediate effect (also AWOTE-indexed) from 7.30pm 3 May 2016. It takes into account all non-concessional contributions from 1 July 2007.

2. Super pension funds

$1.6m ‘transfer balance’ cap to be set as at 1 July 2017 including for existing members. Any excess to be withdrawn or transferred to the ’15 taxed’ accumulation phase. Individuals who breach the cap will be subject to a tax on both the amount in excess of the cap and the earnings on the excess amount.

Tax exemptions will be removed from 1 July 2017 on income earned on pension fund assets that support transition to retirement pensions (for those aged 55 to under 65, an not yet retired). Tax rate will be 15% as is in accumulation phase.